In college trophy hunt, weigh the costs first

Seven steps to help you win the college finance game.

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The traditional tour of college campuses by high school seniors this past summer and continuing this fall often can be viewed as a trophy hunt, with the focus on landing acceptances at the most elite college or university. College selection quickly becomes a brand choice, smartly marketed to families, who are often overwhelmed by the process and anxious to place their child in the most prestigious environment possible.

Influenced by college consultants and school counselors, some parents prepare a "wish list" of colleges utilizing students' GPA and college test scores as a basis of selection. Once the academic screen is satisfied, lifestyle amenities, campus activities, and location loom large. Aggressive and savvy advertising by colleges and annual college rankings in national magazines fuel the fervor by which parents target "hot" campuses.

Well down the list of criteria by which families evaluate campuses is the cost, though that often becomes the determining factor in enrollment. A survey released last month by Sallie Mae, the nation's largest student-loan provider, revealed that 58 percent of families eventually rule out many colleges during the application process due to costs. Surprisingly, 46 percent of parents and 37 percent of college students did not use costs as an initial screen.

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How are families financing a college education? According to Sallie Mae, the average student contributes 33 percent of the total costs, parents pay 48 percent of total costs, with rest coming from grants, scholarships, and support from friends and relatives.

With recent announcements by Ivy League schools boasting additional financial aid to middle-class families, many parents may assume they will qualify for generous discounts. But the reality for most families earning over $100,000 a year is limited financial support. Most parents fear and delay completing, until after applying to colleges, the 11-page, 100 question Free Application for Federal Student Aid (FAFSA) form, the holy grail of college loan and grant support. Unfortunately, many families are disappointed by the scarce amount of dollars offered by a college once their student is accepted.

But many parents are becoming more discerning buyers, taking a closer look at what public four-year colleges have to offer. Students who attend these schools pay far less than at private four-year institutions. For example, a 2012 graduate of private university John Hopkins in Baltimore will pay $197,112. Compare that to the $111,760 bill incurred by an out-of-state graduate of the University of California, Berkeley, an equally prestigious public university where I teach.

Richard and Marla Wolfe, of Charlotte, N.C., were impressed by the quality and costs of the state's 16 public colleges after researching schools for their teenage son. "Annual tuition at a North Carolina public college costs approximately $4,000, while Duke University, my alma mater, charges $34,000 tuition," says Mr. Wolfe.

Ms. Wolfe sees other advantages. "Parents who choose to pay private college tuition claim brand advantages such as college name on the résumé, contacts one will make, or more doors that are open," she says. "With graduate education becoming more important, overpaying for an undergraduate degree is short sighted and unnecessary."

To win at the college finance game, parents should take the following steps in this order:

1. Post this financial schedule on your desk:

October: Contact financial aid offices and discuss options.

November: Check state financial aid deadlines at your state's higher education agency.

December: Complete the FAFSA.

April: Review college financial aid offers and negotiate better packages.

2. Estimate a four-year college budget. Use Sallie Mae's Education Investment Planner at salliemae.com, incorporating a list of potential colleges.

3. Identify your total personal sources of financing. Determine whether they are likely to change over a four-year period.

4. Learn your chances of receiving financial aid and what your family will be expected to contribute toward college by filling out the FAFSA at fafsa.ed.gov.

5. Select your five top colleges, four that you can afford and are likely to accept your student. Target one school you cannot afford but may provide financial support based on merit or need. Use projectonstudentdebt.org to assist you.

6. Discuss your student's postgraduate education plans. Reduce burdensome repayment obligations if your student is seeking a graduate degree. See the federal loan repayment calculator at finaid.org.

7. Maximize your savings. Use the College Board savings calculator at collegeboard.com

Dr. Kathleen Connell is a professor at Haas Graduate Business School, University of California, Berkeley.

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